Gaming

The Golden Age of Watching Other People Play Video Games

(Corrects the spelling of Matthew DiPietro's name in the third paragraph.)

It’s too soon to know whether Microsoft (MSFT) or Sony (SNE) will emerge victorious from this round of the great video-game console wars, but it may not be premature to name the real winner: Twitch.tv.

Each of the new consoles makes it easy to record and share videos of game play, and Twitch is a company built around the production and consumption of videos of people playing video games. The venture started in 2011 as an offshoot of Justin.tv, which provided a way for people to stream live video, an activity inspired by the founder’s proclivity to record and stream his entire life to the Internet. It turned out that one thing other people really enjoyed broadcasting was screenshots of themselves playing Halo.

Until last week this wasn’t an easy proposition, especially for people playing on consoles, rather than PCs. Would-be broadcasters had to buy additional hardware and spend some time tinkering. “All of these guys go through a process that is not easy. For the consoles, it’s a nightmare,” says Matthew DiPietro, the company’s vice president of marketing. “You have to be a real McGuyver.”

But the Playstation 4 has a simple share button on the controllers that allows gamers to transmit their exploits via Twitch or Ustream, another streaming company. Microsoft says gamers will be able to stream directly to Twitch early next year.

John Koller, Playstation’s vice president of marketing, describes the new social features as the biggest difference between this generation of consoles and the one that preceded it, and he says it is a major way the company hopes to keep people engaged. “We’re celebritizing gamers,” he says. “Twitch needed to be integrated an an architectural level.”

It’s an even bigger deal for Twitch and Ustream. Both companies are on the rise, with plenty of room to grow. Twitch says it had 45 million unique viewers in September, up from about 3 million in June 2011. Ustream draws about 88 million people each month, although less than 15 percent of that is for gaming content. The average amount of time spent watching gaming videos on both websites is longer than it is for other types of content. While neither company has reported on traffic, it’s clear by looking at their sites that video is rolling in.

There have been similar patterns of use on YouTube (GOOG), where gaming videos have always been tremendously popular. Google has invested in Machinima, a thirdcompany vying to become gaming’s video empire, and has been making it easier for people who want to stream live video on YouTube. Significantly, YouTube lacks a similar level of integration with the new consoles. Google hasn’t responded to a request for comment.

Not that additional traffic necessarily means easy money. Both Twitch and Ustream say they plan to make money from advertising, but they have declined to offer specific financial figures.

One company pleased with the ease of streaming from the consoles is Major League Gaming, which bills itself as the ESPN (DIS) of competitive gaming. Sundance DiGiovanni, the company’s chief executive officer, says the streaming will make it easier to discover talent for the professional e-gaming circuit. The company generally scouts talent at big, public events, but DiGiovanni says it will soon be able to find the next star gamers before they leave their parents’ basement. “Now a kid can say, ‘I’m the best there is, come watch me now,’” he says.